Student loans often comprise the largest debts other than mortgages that people carry. Many people graduate with tens (or hundreds) of thousands of dollars in student loans. In some cases, they may spend their entire working life paying those loans off. Their payment obligations could be hundreds of dollars a month, which will make it hard for these former students to achieve financial stability.
Unlike most other kinds of unsecured debts, student loans can be very hard to discharge in bankruptcy. Someone will generally need to prove either that there were issues with the educational institution involved or that repayment now constitutes an undue hardship. They will also have to go through a special hearing.
However, just because discharging student loans isn’t easy in bankruptcy doesn’t mean that a bankruptcy filing can’t help you regain control over your finances and your student loans.
Chapter 13 bankruptcy can help you renegotiate your student loans
If you don’t think you can discharge your student loans given your situation, then making them more manageable could be a worthwhile pursuit.
Those hoping to secure a discharge will attend a creditor meeting and arrange a payment plan that they will need to complete before their discharge. Even debts not eligible for discharge can be easier to renegotiate during a Chapter 13 filing. You may be able to reduce your payments, extend the length of time you have to repay the loan or even possibly lower your interest rate.
At the very minimum, reorganizing the rest of your debts can make it easier for you to afford your student loans, so that’s another way to approach the situation. Especially if your student loan lender has been unresponsive to your previous request for help, Chapter 13 bankruptcy could be a way for you to make your student loans more manageable.